Why Was the UK’s Commercial Water Market Deregulated? 

Water Market Deregulated
Water Market Deregulated

Deregulation of the non-domestic water market took place in England in April 2017, following the example of Scotland in 2008. But why was the UK’s commercial water market deregulated and what does this mean? Keep reading below to find out more: 

What Does Deregulation Mean? 

In 2008, the non-domestic water market in Scotland was deregulated. This move led to 130,000 businesses in Scotland being offered the chance to change water provider. Although Scottish Water continued as the sole wholesaler and maintained full control of the water infrastructure, they also created a B2B retail arm, Business Stream. Along with this, deregulation enabled several new providers of varying sizes to join the arena. These retailers would buy water services from Scottish Water and then bundle them with a range of services and added-value offerings. They would then sell these packages to businesses in Scotland.  

England’s deregulation was remarkably similar. Since April 2017, businesses in England have been able to choose the best retailer for their needs, irrespective of where their businesses are located. This is a revolutionary move away from existing practice, where companies get their water and sewerage services from a single provider located nearby.  

Whilst nothing changed about the infrastructure the water passes through along the way, or the water that reaches the consumer, billing and account provision can now be managed by a provider of choice. Businesses now have more options available when it comes to choosing a UK supplier. They can compare water suppliers for business to find the best deals available to them  

Does Deregulation Mean a Lack of Protection? 

Ofwat, the economic regulator for the water sector, assured businesses that deregulation does not mean a lack of protection for businesses. Any water supplied to a business has to have a water supply and sewerage license. Not only that, but Ofwat also continue to monitor the industry, and if needed, will intervene to sort out disputes between suppliers and businesses. Furthermore, for businesses who choose not to change water suppliers or set up a new deal with their existing provider, limits have been set on the amount of money those customers can be charged. This means that they will not overpay.  

What Does This Mean for Businesses? 

There are several benefits to businesses. Not only can it reduce costs, but it also makes it easier for businesses to deal with utility retailers. Companies are now able to choose to use just one supplier, instead of several. Not only that, but there are more incentives for retailers to provide better service too. This is because customers can choose to switch to a new retailer if they are not happy with the service they are given. Thanks to this, water companies have had to make customer care a priority as failure to do so would inevitably result in lost revenue and lost customers to the competition 

In April 2017, the UK government opened the commercial water market, intending to improve customer satisfaction, customer service and reduce costs to businesses. This means that businesses, public sector bodies and charities now have the option to choose their water provider. This currently does not apply to domestic customers. However, in the next few years, we may see the Government and the water industry open this market to domestic customers and, if implemented, it could save households up to £3 billion.